Education Savings Plan

Tips For Planning College Savings

An education savings plan is not something many parents think about while their children are still in diapers. These parents don't even think of starting college savings for their future education. But time passes swiftly and one day they may want to go to college. How will you feel if you haven't made any provisions and must deny them the benefits of further education? After all, the best way to get out of financial difficulty is through higher education. Unfortunately, it costs money.

A great way to plan for your child's education is to start saving money in a special account for them while they are still tiny tots. If they don't use it, you still have it; meanwhile, you will have saved a great deal of taxes. That's right, many plans that are especially for education attract significant tax savings and other perks like great interest rates. Always be sure to investigate each savings plan thoroughly before you agree to it.

Many colleges and universities run educational savings plans called 529 plans. There are a great variety of these plans and they all have different features. You need to find out which 529 plan is the one that suits your circumstances best. In some cases grandparents can start a savings plan for their grandchild or grandchildren. The child need not be a baby. Even if children are now in high school, these plans can still be used to advantage. If the child ends up not going on to college, the money is returned, but at least you haven't had to pay tax on it for a couple of years.

Remember, your child can receive up to $800.00 tax-free income if it is for educational purposes. For a newborn, you will need to set aside something like $312.00 per month to get them through a four-year average public course. If you prefer the to attend an average private or average Ivy, you would need much more. An average private four year course would be something like $770.00 while an Ivy would be over $1000,00.

It is also possible to open up an education savings account if your child is attending a private or religious elementary or secondary school. This is a good tax-free way to invest and the money can still be used for college.

Banks often have some educational savings plan also. Inquire at several financial institutions and compare the results to see which one will suit you best. Much will be revealed by an Internet search as financial and educational institutions advertize such products on their websites. Whatever plan you decide upon, the sacrifice will be well worthwhile when you see your child graduating - a fine, young man or woman ready to take on the world.

Review: How To Plan Ahead For Large Expenses, (and Include Your Children's College Education.)

Information on the 529 college savings plan here.